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Time to Hop on the Natural Gas Train

With hedge funds performing miserably this year compared to the indexes, you’ve got to say that sometimes it helps to be a little stupid. Those investors who didn’t read the Q’s, ignored the warnings of slowing Chinese growth and EU double-dip recession and just blithely kept long dividend staples in Vanguard index funds have done spectacularly well.

Such a year would make Jack Bogle proud, never have we seen such a complete vindication of his hold, hold, and hold strategy as 2013.

I am a big fan of Mr. Bogle and try to keep a major portion of my portfolio under wraps and unmoving – but I’m also a trader and my career has been about improving performance based on tactical allocation and better understanding the commodity cycles – with a look to improve on mere indexes.

Such a value has emerged in natural gas, which has seen 3 years of miserable performance, but is finally poised to rise from the ashes like the phoenix. Numbers don’t lie – a cratering of rig counts and voluntary shut-ins has finally pushed storage of gas under the 5-year average – a monumental achievement. In recent conference calls from the supermajors, I did not hear any of the companies even suggest that they were going to be wooed by $4 natural gas into returning production capex from crude oil and liquids to resume drilling for natty; it seems likely that many quarters of rising gas prices will be needed…

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